Timeshare company sued for best interest failure
Timeshare company Ultiqa Lifestyle Promotions is being sued for failing to ensure financial advice was in best interests of customers by the Australian Securities and Investments Commission (ASIC).
ASIC had commenced civil penalty proceedings against Ultiqa regarding advice provided by financial advisers who were authorised representatives (ARs) of Ultiqa from October 2017 to March 2019.
ASIC’s case stated Ultiqa’s ARs did not act in their clients' best interests and did not give appropriate advice based on clients’ circumstances.
The corporate regulator claimed that some consumers had not sought advice regarding a timeshare scheme and some were unaware they were receiving financial advice.
During ASIC’s investigation, consumers reported to ASIC that upfront costs of joining the timeshare scheme were approximately $10,000 to $25,000, with ongoing fees of up to $800 per year.
Some consumers complained to ASIC they had difficulty booking holidays due to lack of availability.
ASIC further alleged that Ultiqa did not provide relevant training to its AR, monitor and supervise its ARs appropriately; and have documented policies and procedures in place to support the advice process.
ASIC also alleged Ultiqa’s conduct amounted to a breach of its obligations as an Australian financial services (AFS) licensee to act efficiently, honestly and fairly.
Ultiqa ceased selling interests in the Scheme on 28 January, 2020, and was placed into members' voluntary liquidation on 30 April, 2021.
The scheme remained active, as did the balance of the Ultiqa Group entities and the firm currently held an AFS licence.
ASIC was seeking declarations, pecuniary penalties and other orders to be made by the Court and the date for the first case management hearing was yet to be scheduled.
Karen Chester, ASIC deputy chair, said timeshare schemes were complex financial products which could be difficult to understand and involved long-term financial commitments.
“Consumer harm can and has resulted when consumers are not aware of the up-front costs, ongoing fees or the nature of their investment – like how easy (or not) it is to exit,” Chester said.
“This is the first time ASIC has taken action against a timeshare provider in relation to financial product advice practices.
“The timeshare industry is on notice to ensure existing compliance and advice practices comply at all times with the obligations on all financial advisers, especially for that advice to be in the consumers’ best interests.”
AUTHOR
Chris Dastoor
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